Under what circumstances might Crave consent to settlements to protect persons or property, or its reputation or goodwill?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
Without limiting the generality of the foregoing, Guarantor agrees that Sublessor may, in its sole and absolute discretion, without notice to or consent by Guarantor, and without in any way releasing or impairing any liability or obligation of Guarantor hereunder, (i) waive compliance by Sublessee with any of its Obligations or covenants under the Lease or waive any default thereunder, or grant any other indulgence with respect to the Lease, (ii) modify, amend or change any provision of the Sublease, (iii) grant extensions or renewals of the Sublease or the Obligations, or effect any release, compromise or settlement in connection therewith, including any release of the liability of Sublessee or any guarantor or other person liable on the Obligations or any part thereof, (iv) transfer its interest in the premises covered by the Sublessor its rights under this Guaranty, (v) consent to the assignment by Sublessee of its rights under the Lease, and (vi) deal in all respects with Sublessee and the Obligations as if this Guaranty were not in effect. Guarantor further waives (i) notices of acceptance of this Guaranty, (ii) notices to Guarantor of any kind in any circumstances whatsoever, including without limitation, notice of dishonor and notice of any default by Sublessor under the Sublease and all waivers or indulgences granted by Sublessor to Sublessee under the Sublease, and (iii) diligence, presentment and suit on the part of Sublessor in the enforcement of any of the Obligations.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, Crave as the Sublessor has the right to grant settlements without notice or consent from the Guarantor. Specifically, Crave may "effect any release, compromise or settlement in connection therewith, including any release of the liability of Sublessee or any guarantor or other person liable on the Obligations or any part thereof".
This means that Crave retains broad authority to resolve disputes or legal matters related to the sublease without needing approval from the guarantor. This could include settling claims related to property damage, personal injury, or breaches of the sublease agreement. The guarantor essentially waives their right to be informed or to object to these settlements.
For a prospective Crave franchisee acting as a guarantor, this clause signifies a significant risk. They are bound by the terms of the guaranty even if Crave makes decisions that could potentially increase their liability. It is crucial for franchisees to fully understand the implications of this waiver and to assess their risk tolerance before agreeing to act as a guarantor under these conditions.
This type of clause is not uncommon in franchising, as franchisors often seek to maintain control over legal and business decisions to protect the brand and system-wide interests. However, franchisees should carefully review such provisions with legal counsel to understand their rights and obligations.